Reminder about MI Sales/Use Tax

Excerpt from the MI Department of Treasury Daily Use Bulletin:

With the kick-off of the holiday shopping season beginning after Thanksgiving Day, the Michigan Department of Treasury reminds Michiganders to account for “use tax” when sales tax is not factored into the final price of items purchased online.

Michigan’s use tax generally applies to purchases made when a retailer does not collect sales tax. This often happens when individuals purchase items through online or mail-order retailers or television shopping networks without physical locations inside the state of Michigan.

“When you buy an item online and the retailer doesn’t charge sales tax, you are required to report and pay the use tax on that item,” Michigan Treasurer Nick Khouri said. “The revenue collected from these taxes fund some of our most-important community services, such as schools and local police and fire departments. By not reporting these taxes, you are shortchanging municipalities and school districts of potentially hundreds of millions of dollars.”

The Michigan Department of Treasury’s Office of Revenue and Tax Analysis estimates between $200 and $300 million is lost each year due to Michiganders not reporting their use tax. Most of the dollars collected from taxpayers go to the School Aid Fund, General Fund and to the Local Community Stabilization Authority.

The use tax is calculated at the rate of 6 percent of the total purchase. Items subject to use tax include appliances, books, clothing, computers, DVDs, CDs, electronics, furniture, pre-written computer software and tobacco products.

Taxpayers can report the use tax annually when filing their Michigan Individual Income Tax Return.

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